\"I think we goofed when we hired that new assistant controller,\" said Ruth Sca

Question

"I think we goofed when we hired that new assistant controller," said Ruth Scarpino, president of Provost Industries. "Just look at this report that he prepared for last month for the Finishing Department. I can’t understand it."

*Consists of cost transferred in, $4,300; materials cost, $2,060; and conversion cost, $2,320.

"He's struggling to learn our system," replied Frank Harrop, the operations manager. "The problem is that he's been away from process costing for a long time, and it's coming back slowly."

"It's not just the format of his report that I'm concerned about. Look at that $23.370 unit cost that he's come up with for April. Doesn't that seem high to you?" said Ms. Scarpino.

"Yes, it does seem high; but on the other hand, I know we had an increase in materials prices during April, and that may be the explanation," replied Mr. Harrop. "I’ll get someone else to redo this report and then we can see what’s going on."

Provost Industries manufactures a ceramic product that goes through two processing departments—Molding and Finishing. The company uses the weighted-average method in its process costing.

Required:

1-a. Calculate the equivalent units of production.

1-b. Calculate the cost per equivalent unit. (Round your answers to 2 decimal places.)

1-c. How much cost should have been assigned to the ending work in process inventory? (Round your intermediate calculations to 2 decimal places.)

1-d. How much cost should have been assigned to the units completed and transferred to finished goods? (Round your intermediate calculations to 2 decimal places.)

Finishing Department costs: Work in process inventory, April 1,250 units; materials 100% complete; conversion 60% complete $ 8,680 * Costs transferred in during the month from the
preceding department, 2,750 units 31,100 Materials cost added during the month 12,866 Conversion costs incurred during the month 26,800 Total departmental costs $ 79,446 Finishing Department costs assigned to: Units completed and transferred to finished goods,
3,400 units at $23.370 per unit $ 79,446 Work in process inventory, April 30, 600 units;
materials 0% complete; conversion 40% complete 0 Total departmental costs assigned $ 79,446

Explanation / Answer

Weighted average cost Beggining units 1250 Transferred out 3,400 Started intro production 2750 Ending units 600 4000 4000 Equivalent units Material Conversion Transferred in Units transferred                      A 3400 3400 3,400 Ending Units 600 600 600 Completion 100% 40% 100% B 600 240 600 Total units 4000 3640 4000 Particulars Material Conversion Transferred in Total As at beginning 2060 2320 4300 8680 Added during the month 12866 26800 31100 70766 Cost to be accounted for 14926 29120 35400 79446 Total eqivalent units 4000 3640 4000 Cost per equivalent unit 3.73 8.00 8.85 20.58 Cost per equivalent unit = Cost to be accounted for / Total equivalent units Cost of ending work in progress Particulars Material Conversion Transferred in Ending units 600 600 600 Cost per equivalent units 3.73 8.00 8.85 Completion 100% 40.0% 100% Total cost 2238.90 1920 5310 Total cost 9469 Cost of goods transferred Particulars Material Conversion Transferred in Number of units 3400 3400 3400 Cost per equivalent units 3.73 8.00 8.85 Total amount 12687.10 27200 30090 Total 69977 Add Work in proress ending Material                                      2238.90 Labor 1920 Overheads 5310 9469 Total cost accounted for 79446

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